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UNITED STATES v. 15.3 ACRES

August 15, 1957

UNITED STATES of America, Plaintiff,
v.
15.3 ACRES OF LAND, more or less, situate IN THE CITY OF SCRANTON, County of Lackawanna, and Commonwealth of PENNSYLVANIA, and Delaware, Lackawanna and Western Railroad Company, et al., Defendants



The opinion of the court was delivered by: MURPHY

The issue is just compensation to defendant for the taking by the United States for military purposes of possession and title to 15.3 acres of land, underlying coal and minerals, *fn1" four major buildings with a gross floor area of 450,310 sq. ft., overhead cranes and other improvements. *fn2" Upon defendant's application the estimated amount, deposited in the court's registry, $ 860,000, was paid on account. *fn3" The issue of just compensation, over government objection, was referred to a commission ( United States v. 15.3 Acres of Land, etc., D.C., 17 F.R.D. 337; F.R.C.P. Rule 71A(h)), consisting of a coal operator; a civil engineer, and a lawyer of mature years, each an outstanding citizen of business experience, unquestioned ability and integrity. After extensive hearings, *fn4" a view and inspection of the premises, the commission heard arguments, considered briefs, and, after study and deliberation, made findings of fact and conclusions of law; filed a transcript of the proceedings, 477 pp. and exhibits, and a comprehensive report concluding that just compensation should be $ 1,720,700. The government contends the amount is too large; the Railroad that it is too small; the government that it should be rejected, a new hearing ordered, or the award modified; the Railroad that it should be $ 2,250,000.

We must accept the findings of fact unless clearly erroneous, Rule 53(e)(2); Anderson v. Mt. Clemens Pottery Co., 1946, 328 U.S. 680, at page 689, 66 S. Ct. 1187, 90 L. Ed. 1515, and see Rule 52(a), making allowances for the advantages possessed by the commission in appraising the significance of conflicting testimony. Graver Tank & Mfg. Co., Inc., v. Linde Air Products Co., 1949, 336 U.S. 271, at pages 274-275, 69 S. Ct. 535, 93 L. Ed. 672. "A finding is 'clearly erroneous' when although there is evidence to support it, the * * *court on the entire evidence is left with a definite and firm conviction that a mistake has been committed.' United States v. United States Gypsum Co., 333 U.S. 364 (at page) 395, 68 S. Ct. 525, 542, 92 L. Ed. 746.' United States v. Oregon State Medical Society, 1952, 343 U.S. 326, at page 339, 72 S. Ct. 690, at page 698, 96 L. Ed. 978; Hardt v. Heller Bros. Co., 3 Cir., 1948, 171 F.2d 644, at page 648. We may not refuse to recognize findings or escape the conclusions to which they lead merely because of differences in personal persuasion on the evidence or dissatisfaction with the result reached. Ferroline Corp. v. General Aniline & Film Corp., 7 Cir., 1953, 207 F.2d 912, at page 920; United States v. Yellow Cab Co., 1949, 338 U.S. 338, at pages 341-342, 70 S. Ct. 177, 94 L. Ed. 150.

 Obviously this is not an invitation to abdicate the judicial function. Krinsley v. United Artists Corp., 7 Cir., 1955, 225 F.2d 579, at page 583. The purpose of a finding of fact is to distill from the evidence the pertinent facts to which relevant rules of law may be applied. Hartford-Empire Co. v. Shawkee Mfg. Co., 3 Cir., 1944, 147 F.2d 532, at page 535. Speculation cannot be substituted for proof. The requirement is for probative facts capable of supporting with reason the conclusions expressed. In re Leichter, 3 Cir., 1952, 197 F.2d 955, at page 957, and see Baumgartner v. United States, 1944, 322 U.S. 665, at pages 670-671, 64 S. Ct. 1240, 88 L. Ed. 1525.

 Upon review it is the duty of the court to accept the award of the commission unless it is clearly erroneous in whole or in part because based upon substantial error in the proceedings, a misapplication of controlling law, or because it is unsupported by substantial evidence or contrary to the clear weight of the evidence. United States v. Waymire, supra, 202 F.2d at pages 553-554. A conclusion of law must have a proper legal basis. Busser v. United States, 3 Cir., 1942, 130 F.2d 537, at page 539; Duquesne Club v. Bell, 3 Cir., 1942, 127 F.2d 363, at page 365, 143 A.L.R. 1377. Likewise as to the mixed question of law and fact. Campbell Soup Co. v. Wentz, 3 Cir., 1948, 172 F.2d 80, at page 82. Where an improper legal theory is adopted, see United States v. 44.00 Acres of Land, etc., 2 Cir., 1956, 234 F.2d 410, at page 414. Interpretations of written documents do not have presumptive validity. Eddy v. Prudence Bonds Corp., 2 Cir., 1947, 165 F.2d 157, at page 163.

 The burden of showing a finding of fact is clearly erroneous is on the one attacking it. Grace Bros. v. C.I.R., 9 Cir., 1949, 173 F.2d 170, at page 174. It is especially strong where the question is one of credibility; lighter as to logical inferences drawn from undisputed facts or documents. Where an ultimate fact is simply the result reached by processes of reasoning from, or the interpretation of legal significance of evidentiary facts, it is subject to review apart from impact of rule. Galena Oaks Corp. v. Scofield, 5 Cir., 1954, 218 F.2d 217, at page 219, and see Lehmann v. Acheson, 3 Cir., 1953, 206 F.2d 592, at page 594.

 A specific answer to each request is not required. Delzell v. Central Public Utility Corp., D.C.Del., 56 F.Supp. 25, at page 30. The request may have been denied, deemed immaterial, or covered by other findings. Cf. Cohen v. Globe Indemnity Co., D.C.E.D.Pa.1941, 48 F.Supp. 1, at page 2. The ultimate test is whether the findings are sufficiently comprehensive and pertinent to the issues to provide a basis for decision, and whether they are supported by the evidence. Schilling v. Schwitzer-Cummins Co., 1944, 79 U.S.App.D.C. 20, 142 F.2d 82, at pages 83-84, and see United States v. Certain Parcels of Land, etc., 3 Cir., 1954, 215 F.2d 140, at page 145.

 After hearing, a review, consideration and study of the whole record, the briefs and arguments, we have concluded that the hearings were fairly, competently and impartially conducted; *fn5" that they are free from error; that the award is supported by substantial evidence; that it is within the range of the expert testimony, and that is should be adopted and followed. F.R.C.P. Rules 71A(h), 53(e)(2); D.M.W. Contracting Co. v. Stolz, 1946, 81 U.S.App.D.C. 334, 185 F.2d 405, at page 407; In re Mifflin Chemical Corp., 3 Cir., 1941, 123 F.2d 311, at page 313; United States v. Certain Parcels of Land, supra, 215 F.2d at page 146; United States v. Waymire, supra, 202 F.2d at page 553; 5 Moore's Federal Practice, 2d Ed., § 53.12.

 One of the principal areas of controversy involves a lease of the entire property by the Railroad to United States Hoffman Machinery Corporation, a private Delaware corporation, for manufacturing heavy ordnance, or other heavy manufacturing. Available for conversion, lease or sale because of a recent change to diesel engines, the lease signed by the president of each corporation was for a fifteen month period, January 1, 1953-April 14, 1954, for $ 500,000 for the term payable monthly in periodically increased amounts, subject to renewal for four successive terms of one year each at a yearly rental of $ 400,000 payable in monthly installments. *fn6"

 Since Hoffman was to operate in the manufacture of ordnance under a government facilities and a supply contract, the form of lease had to be approved by the Contracting Officer of the United States Army Ordnance Department. Prerequisite to such approval the Railroad was required to grant an option to the Army to purchase the premises for $ 2,000,000, exercisable not earlier than 13 months nor later than 19 months after commencement of the original term. Hoffman entered into possession and commenced manufacturing. At the end of the original term the first renewal for one year was executed. The Army did not exercise its option but shortly thereafter while the lease was in effect took title in these proceedings. *fn7"

 Hoffman, taking the premises as it found them, had the right at its sole cost and expense to remodel and renovate, *fn8" to adapt the premises to its use. It agreed to keep and maintain the premises in good order and condition; make all necessary repairs and painting, and to vacate and surrender the premises in good order, condition and repair (reasonable wear and tear excepted), removing such as the Railroad may direct of all property placed, installed or constructed upon, or affixed to the premises. *fn9" As to government property affixed to or incorporated in the premises, it was agreed that title was not to be affected; such property was not to become a fixture or lose its identity as personalty. *fn10" Hoffman agreed to remove it and, if any structural damage to the premises occurred in doing so, to repair and put them into substantially the same condition existing prior to the installation, reasonable wear and tear excepted, or in equally good and serviceable condition.

 To rehabilitate and adapt the premises Hoffman, through Consolidated Engineering Company of Baltimore or its subcontractors, made certain repairs, installations and improvements *fn11" to the buildings and property, which in the opinion of the commission became and formed such an integral part thereof that it would be wholly unreasonable to suppose that any one ever contemplated such permanent improvements, changes and alterations would under any circumstances be ripped out or removed when the lease was terminated; further, that in many instances it would be impossible to do so, and in all instances it would cost far more than the improvements or restoration themselves. Contemporaneous with the renewal of the lease for one year the Railroad, reserving all its other rights, wrote Hoffman waiving and relinquishing its right to removal of these items upon termination of the lease.

 Certain buildings and structures were added. *fn12" All of the items included in Note 12 were considered by the commission as belonging to Hoffman *fn13" and were excluded from the commission's calculations in arriving at just compensation.

 Relying upon one phase of United States v. 5 Parcels of Land in Harris County, Texas, 5 Cir., 1950, 180 F.2d 75, where it was assumed for the purpose of argument, the government argues that while Hoffman was the nominal lessee, in view of the provision for reimbursement in the facilities contract, the option, and the possibility of condemnation, the government was practically in possession of the premises since January 15, 1953, and that the owner was not entitled to any enhancement in value so far as the physical condition of the premises was concerned after that date. We disagree. As Mr. Justice Holmes observed, '* * * The law as to leases is not a matter of logic in vacuo; it is a matter of history * * *.' Gardiner v. Wm. S. Butler & Co., 1918, 245 U.S. 603, at page 605, 38 S. Ct. 214, 62 L. Ed. 505. The one asserting agency has the burden of proving it. Shay v. Schrink, 1939, 335 Pa. 94, at page 97, 6 A.2d 522. Its existence is not to be presumed merely because it is asserted. Gasner v. Pierce, 1926, 286 Pa. 529, at page 533, 134 A. 494. To constitute the relationship of landlord and tenant these elements must be present: Permission or consent on the part of the landlord, subordination to the landlord's title and rights on the part of the tenant, a reversion in the landlord, an estate in the tenant, and the transfer of possession and control of the premises to the tenant under a contract either express or implied between the parties. Coggins v. Gregorio, 10 Cir., 1938, 97 F.2d 948, at page 950. The relation cannot exist without such contract. In re Wilson's Estate, 1944, 349 Pa. 646, at page 649, 37 A.2d 709. "A contract cannot arise by implication of law under circumstances the occurrence of which neither of the parties ever had in contemplation'.' Carpenter v. United States, 1873, 17 Wall. 489, at pages 493, 494, 84 U.S. 489, at pages 493, 494, 21 L. Ed. 680.

 The tenant takes exclusive possession of the premises, all his rights being subordinated to the primary right of the fee of the owner, and subject to the reversion to him at the end of the term or on termination of the lease. United States v. Richfield Oil Corp., D.C.S.D.Cal.1951, 99 F.Supp. 280, at page 288, affirmed, 1952, 343 U.S. 922, 72 S. Ct. 665, 96 L. Ed. 1334. As to the reversion, see State of Washington v. United States, 9 Cir., 1936, 87 F.2d 421, at page 430; 32 Am.Jur. Landlord and Tenant, § 76; 51 C.J.S. Landlord and Tenant § 256.

 The option to purchase was in the nature of a continuing offer to sell. Willard v. Tayloe, 1869, 8 Wall. 557, at page 564, 75 U.S. 557, at page 564, 19 L. Ed. 501; United States v. Hayman, 7 Cir., 1940, 115 F.2d 599, at page 601; Central Nebraska Public Power & Irr. Dist. v. Harrison, 8 Cir., 1942, 127 F.2d 588, at page 593; Atlantic Greyhound Corp. v. Smithdeal, 4 Cir., 1951, 192 F.2d 453, at page 457. So long as the option remained dormant the lease was in full operation and effect with all the incidents and implied obligations of the landlord-tenant relationship. 32 Am.Jur. Landlord and Tenant, § 300; 51 C.J.S. Landlord and Tenant § 81(b).

 In this, as in any other case of a written contract, those who are parties to and bound by it are to be ascertained by an inspection of the instrument; its provisions are controlling in the absence of some positive rule of law or provision of statute requiring them to be disregarded. United States v. ...


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